Posted
by
samzenpuson Thursday September 16, 2010 @02:31AM
from the grunt-and-sniff dept.

itwbennett writes "According to a study by researchers at the University of British Columbia's Sauder School of Business, young CEOs with higher levels of testosterone in their system are 'more likely to initiate, scrap or resist mergers and acquisitions' — even when it's not in their best interest. 'We find a strong association between male CEOs being young and their withdrawal rate of initiated mergers and acquisition,' says Prof. Levi, whose research relies on the established correlation between relative youth and increased levels of testosterone. 'For instance, young CEOs, who have higher levels of testosterone, tend to reject offers even when this is against their interest.'"

There's nothing in TFA to suggest that testosterone as such has anything to do with!

Not denying that it may be stupid, not fully agreeing either - just pointing out that you are wrong (at least in form) - the TFA does reference studies in regarding the level of testosterone and results of negotiations:

the TFA bears the title of "Young, male, testosterone-fueled CEOs...".

from the body of the TFA:

Burnham found that, among those considering the offers, participants with higher levels of testosterone were more likely to reject what they perceived as low offers, ending up with nothing as a result.

A podcast interview with Prof. Levi on the results of “Deal or No Deal: Hormones and the Mergers and Acquisitions Game” can be found on the INFORMS website at www.scienceofbetter.org/podcast.

Women who received a placebo but believed they had received testosterone offered fair money splits only 10 percent of the time, probably because they harbored a negative stereotype of testosterone's effects. Women who were given testosterone but thought it was a placebo, on the other hand, offered fair-share splits 60 percent of the time--significantly more often than those who correctly guessed they got testosterone (30 percent) or

I read the article. There is nothing written in this article to suggest that experience and testosterone were deconvolved suitably in their analysis. Do you have the actual paper, where they somehow account for age and wisdom? If they did not test *before* and *after* being giving people testosterone there is no basis for claiming their results were from testosterone and not wisdom.
It's more likely their statistics are fubar than this is a good study.

From their actual paper [ssrn.com]'s conclusion section:
"In this paper we examine whether testosterone, which is associated with male dominance seeking and which we have proxied by male CEO age, is associated with M&A withdrawals, the use of tender offers, and bid initiation."
Fucking ridiculous, I'm surprised this paper even got published. They didn't even sample anyone's testosterone.

It looks like this paper has only been "published" on the Social Science Research Network. In their FAQ [ssrn.com] peer review is only mentioned twice, and only in reference to one of their sister networks.

Thanks to you, I was persuaded to read the whole article. It plainly said that it relied on the inverse correlation between age and testosterone levels, then it never said anything about actual blood tests. Relied in this sense is a very strong word, it means the whole study depended on this fact. So I read the article making the mental substitution of inexperience for high testosterone and it made perfect since, Inexperienced CEO's make more mistakes. WoW! If they conducted this same experiment with f

Actually, no, if you actually RTFA (I know, I know, it's Slashdot), you'll find out that no, it's also based on a study where they actually asked people to play a sort of game, and they actually measured testosterone levels. Those who had more testosterone, tended to be more competitive even when it resulted in losing the game.

In fact those with high testosterone levels ended up doing things as irrational in any imaginable circumstance as to basically reject an offer of free money, just because they perceived it as being too low. You don't want someone like that making economic decisions.

Just age and experience had nothing to do with it. Those test subjects who were just as young but more deficient in the testosterone department tended to take more rational decisions.

Basically, thinking with your dick is bad. The stereotype of the Real Man with real balls may have been a plus when it came to making him do dumb stuff like going to get stabbed at for his king, but it turns out to be a liability when the job requires more thinking with the head upstairs than with the one below the belt. You want someone taking economic decisions because they make logical and mathematical sense, not because it's his kind of measuring dick size against the partners.

Well, as a general criterion, I would agree with you, but here we're talking a simple game with clear rules. The offer to get free money was clearly just an offer to get free money. The one offering it didn't get to write some "I own your kids now" clause in the fine print or anything.

The stereotype of the Real Man with real balls may have been a plus when it came to making him do dumb stuff like going to get stabbed at for his king, but it turns out to be a liability when the job requires more thinking with the head upstairs than with the one below the belt. You want someone taking economic decisions because they make logical and mathematical sense, not because it's his kind of measuring dick size against the partners.

Then I hope you're the of sociopath kind who, after climbing to the top, will take the business decisions with the head on your neck, not with the one in your pants.

Really, the point I was actually trying to make there was that being either young or insecure and needing to prove penis size, isn't what makes those aggressive young things play other people's emotions on the way to the top. Being a sociopath isn't even necessarily a bad thing in today's culture

suppose someone understands people's emotions and can use them to their advantage. that doesn't mean they are controlled by their emotions... on the contrary.and another thing: the best leaders are those that have good advisors, and listen to those advisors. high levels of testosterone will probably lead you to do things your own way, to prove yourself. from an evolutionary perspective, this makes sense: the hormone is there to push everyone to do their own thing, so females can pick the winners.hopefully,

Yet these same aggressive young men are the ones that start new businesses, thinking they've got what it takes to make it big, even though realistically the odds are against them. These same young men manage to convince investors and shareholders that they have got what it takes.

Thing is, the investors are usually the older types. They made their money already and are now financing startups. These people will invest in a company with someone they think is a poor lead if they think the company product looks good.

Once you have a few investors you have a board - stocked with the older types who invested - who make most of the major decisions for you. The CEO is really just a face for the board and the person who makes day to day minor decisions about the running of the company. If the

Yet these same aggressive young men are the ones that start new businesses, thinking they've got what it takes to make it big, even though realistically the odds are against them.

The odds are against them, as you say. More than half of all startups fail within the first year. Unless you have a really original idea and the skill to take it to market, starting a new business is normally an bad decision.

These same young men manage to convince investors and shareholders that they have got what it takes.

Could be. The last startup I worked for (which also went bust) was created by a young woman, and she didn't manage to convince any investors or shareholders, just banks to lend her money (and not at a great interest rate). The investors, however, do not necessarily think that the st

Also, there is the method of "Burning Up Bridges" when you deliberately limit your choices -- like Cortez scuttling his ships. While this seems as an irrational deed, it could be useful in cases. Game theoretically speaking, you eliminate some of the possible outcomes of the original game to force a new equilibrium.

In fact those with high testosterone levels ended up doing things as irrational in any imaginable circumstance as to basically reject an offer of free money, just because they perceived it as being too low. You don't want someone like that making economic decisions.

On the contrary... I really don't want econ majors making economic decisions. The idea the ultimatum game forces people to treat each other fairly... well, that's a world I want to live it.

In fact those with high testosterone levels ended up doing things as irrational in any imaginable circumstance as to basically reject an offer of free money, just because they perceived it as being too low. You don't want someone like that making economic decisions.

Just a small point, but the "ultimatum game" has been conducted many times and the consistent issue it raises is that people often reject low offers, even though as you note it's to reject free money. The new study in part gives one possible exp

Btw, the Nash
equilibrium, optimal solution for splitting $100 would be to offer $0.01 and
keep $99.99. Would you accept that?

How is this a Nash equilibrium?

BTW, it's quite rational to reject $0.01 when the other player receives $99.99, since after the game the richer player has more options available to spend money than the poorer player. If the two players have zero dollars in their pockets to begin with, then any outcome away from 50/50 leads to relative inequality after the game. If the first player offers more than 50 to the other, then he knows that the second player will accept, leading to inequatiy and an incentive to reduce the amount back to 50. But if he offers less than 50 to the other player, then there will be inequality unless the second player rejects. So it's irrational to offer less than 50, and Nash is at 50/50.

That's just the point, though. Yes, it's relative inequality between you and the other player, but you need to consider yourself against where you were before, not where the other guy is gonna be. By refusing an offer of $20 because the other guy will get $80, you're assuring that you'll stay exactly where you were to begin with, whereas you could have come out ahead $20.

I don't think testosterone is the only cause, but I do see a lot more males doing stupid things than females. I would guess that social up

Which is why you don't play the Ultimatum Game against each other. You are competing against yourself in your current situation. If you take the $20, you become $20 richer. If you don't take the $20, you are no richer.

Your "Give me more than you" ultimatum results in a persistent loss for both, which is undesirable. Relatively you are no worse or better off. Realistically you are poorer.

In a discrete, one-time logic, yes, you are correct. You would be $20 ahead of where you were by taking the money than having the "give me more than you" approach.

However, Business is a continuous, statistically driven environment. That means for an organization to move forward the majority of the decision would be logically based, but at some point of time, a business have to take chances. In this example, if you were able to successfully bid out to receive at least $60 (not necessarily getting the $

Consider a variation of the game, when you explicitly signal to the other player that you will not accept an offer worse than 50/50. In that case, (if you are convincing enough), the game changes drastically. To shamelessly copy-paste Wikipedia (from Chicken (game) article):

"Pre-commitment

One tactic in the game is for one party to signal their intentions convincingly before the game begins. For example, if one party were to ostentatiously disable their steering wheel just before the match, the other party w

Not an economist, but shouldn't you also be comparing yourself to the rest of the world? You come out $20 ahead, the other guy comes out $80 ahead, and the world stays in the same place. Wouldn't it be a net advantage when you compare your future position relative to 6 billion people, and acknowledge that the cost is increased buying power in one individual?

This is why you are not running a major corporation or a major business unit. It does matter in a competitive business world. They are called to maximize profit, not just making a few dollars and cents.

Btw, the Nash equilibrium, optimal solution for splitting $100 would be to offer $0.01 and keep $99.99. Would you accept that?

Of course not. The offer would offend my sense of 'fairness'. That's not limited to humans, either. I recall a study in which capuchin monkeys rejected rewards that weren't 'good enough'. It's not the ultimatum game, but it does tap into our sense of fairness.

Those who had more testosterone, tended to be more competitive even when it resulted in losing the game.

Okay, and this is "not in their best interests" why, exactly? It's a pretty narrow view that "winning" by making more money is the "good" result. What if you don't give a toss about money, and want to have fun?

From their actual paper [ssrn.com]'s conclusion section:
"In this paper we examine whether testosterone, which is associated with male dominance seeking and which we have proxied by male CEO age, is associated with M&A withdrawals, the use of tender offers, and bid initiation."
No, they didn't sample anyone's testosterone. Go RTFA the real FA.

Somebody [via highly suspect inference] mentions testosterone and you immediately start thinking about penises. I can trace your connection but find it even less salient and more dubious than theirs (which is very dubious and non-salient).

Anyway...that penis thing...you might do well to think a bit less with yours...it looks to be a tad bit hurt.

Somebody [via highly suspect inference] mentions testosterone and you immediately start thinking about penises. I can trace your connection but find it even less salient and more dubious than theirs (which is very dubious and non-salient).

Anyway...that penis thing...you might do well to think a bit less with yours...it looks to be a tad bit Hurd.

After reading through the posts, I was thinking the same thing. Everyone keeps mentioning "penis size". Testosterone has nothing to do with penis size once you pass puberty. You could have a huge dick and little testosterone, or have a tiny dick and tons of it. About the only real correlation is that if you have more testosterone, you want to use your penis more.

Beside, the participants of the game were NOT CEOs, so it has no meaning whatsoever. It's not because you are taking cranky boosted adolescent to play a game that you can compare to CEOs taking important decisions. The first thing is that it was all a game..

They say it's based on an old experiment where they DID test "more testosterone" against "less testosterone", which yielded results that allow you to say something about testosterone.

What they did, though, is an experiment that tests "younger and more testosterone" against "older and less testosterone", which does not allow you to say testosterone did it. It could also be the age difference, and as long as you're testing two variables against each other simultaneously, you'll never know which one causes the

The 'rejection of free money' is from a test where A is given $100 and has to offer a proportion to B. If B rejects, neither A nor B get anything. The ultimatum game.

The test is supposed to measure irrationality. Since the game is only played once, economists say whatever the offer made by A, if it is more than zero, then B should accept. According to their limited reasoning powers, A should offer B $1 and B should accept. In real life, A typically offers much more than that, and B typically rejects an offers of less than around 40%.

Far from demonstrating the irrationality of the participants the test nicely demonstrates two forms of stupidity particuarly prevelant in economists.

The first form of stupidity is thinking that if something is impossible to measure in monetary terms, then it has no value. They think that by rejecting the offer B gets nothing. Actually, B gets the satisfaction of punishing someone for being stingy. Suppose we were playing with $100 and A offered me $1. I would certainly reject the offer as the satisfaction of seeing A get nothing for being a dick would be worth more than $1.

The second form of stupidity here is the belief that if something cannot be modelled, then its not real. This situation has elements of paradox which makes it hard to model. If we ignore the fact that non-monetary things can have value, there's still something interesting going on here. The fact the B might behave 'irrationally' by rejecting A's offer means that in practise, B ends up making more money than he otherwise would. A knows that B will reject an offer he deams too low, and so A offers much more than he would if he knew that B would take anything he offered. If we stick strictly to money, after the offer has been made B should always take it.. its supposedly 'irrational' not to. However, without the fear of irrationality A would always take $99 and B would get $1. Actually B typically gets much more than that so the 'irrational' behaviour is actually smarter.

Indeed, I can think of many factors to do with being young that might cause this behaviour... Testosterone levels is one, having just set up their baby company and wanting to keep it their baby is another, there are many more.

This includes things like corporate competition. very few of the big companies today got where they are now because they made the logical choices when they were started, presumably by young CEOs.

Actually, on the contrary, I think that if anyone did a serious statistic, they'd find that the only reason they're now big companies instead of also ran, is that at some point down the line they made a decision that made sense. Like, dunno, Sharp realizing that there's a more lucrative market for radios than for pe

In the two-player game, subjects had to agree on how to divide 40 dollars or risk losing it all. Participants who begin with the entire sum of money could offer only five dollars or 25 dollars to their competitor.

Burnham found that, among those considering the offers, participants with higher levels of testosterone were more likely to reject what they perceived as low offers, ending up with nothing as a result.

Now: were the players CEOs? Were they, at least, representatively chosen? TFA doesn't say, but the same TFA gives enough info to say the research at least eliminated factor of "not being in the same position as their older counterparts".

I only skimmed it but I can't find anything to say they determined the testosterone levels by anything other than age.Why they even talk about hormones I'm not sure, from my reading they just seem to be looking at age.

It's as if the author believed that as long as every time they talked about testosterone as long as they used the phrase "testosterone levels, proxied by age" then it made it correct.I counted varients

The survey shows a link between young managers and resistance to mergers. Unless they measured testosterone levels in each of the people (which I don't think they have?) then there is no more reason to believe it has any more to do with it than amount of hair on their heads). Is anyone really that shocked by this? A lot of younger people would rather aim for the top and risk hitting the bottom than settle for 2nd place. I expect my own decisions are more risky now than they will be as I age.

Hmm they seem to be a bit confused regarding causality here. In the interests of science, what if we try a small substitution/amendment:

"According to a study by researchers at the University of British Columbia's Sauder School of Business, young CEOs with higher levels of PARTICIPATION IN SOCCER/MASTURBATION/INTEREST IN SPACE TRAVEL/IPOD OWNERSHIP are 'more likely to initiate, scrap or resist mergers and acquisitions' — even when it's not in their best interest. 'We find a strong association between m

More importantly, it misses the point. Assuming that the symptoms are true, that older CEOs tend to make better business decisions, assigning it to lower testosterone levels is a bit absurd. Perhaps it is due to experience? Perhaps we get a little less impulsive as we age, tend to not make snap decisions, and exercise better judgement at 55 than at 25? Maybe we just see the big picture better as we age. Some call that wisdom.

Saying that testosterone is the root cause of bad CEO decisions is like the FS

not only that but i distinctly recall being a young male and the effects of high testosterone levels.

To my experience, high testosterone drives one to seek out mergers. Offers are never rejected. Males under the influence of testosterone generally show a reluctance to withdraw. I think this study is flawed.

are 'more likely to initiate, scrap or resist mergers and acquisitions' — even when it's not in their best interest. '

'For instance, young CEOs, who have higher levels of testosterone, tend to reject offers even when this is against their interest.'

First of all it says "even when it's not in their best interest". This is a strange claim.
CEOs are not supposed to make decisions that are in their best interest anyways, they are specifically supposed to make decisions that are in their company's best interest, and in particular, that best serve the shareholders of their company. To intentionally do otherwise would be reckless, not what they agree to do by becoming CEO, and could get them sued, nonetheless.

Second of all what is in a person (or company's) best interest is subjective.
To claim they are acting against their interest, you are applying prescriptive measures --- that they in your opinion should do certain things.
For example "facebook should have agreed to merge with twitter".
That is your opinion, which might or might not bear out.

To cast a point of view about whether it was in their best interests or not is "in retrospect".
In retrospect it is always easy to say someone should or should not have done that, knowing the outcome.
Not knowing the outcome, it is not so clear, and they are CEO there, not you, which is presumably out of some merit.

“We find a strong association between male CEOs being young and their withdrawal rate of initiated mergers and acquisition,” says Prof. Levi, whose research relies on the established correlation between relative youth and increased levels of testosterone.

I sense a case of post-hoc ergo propter hoc here.

Perhaps a better explanation would be, they are young, so they are as individuals less experienced, less wise, their age could have something to do with it.

Also, the fact that they're male doesn't mean testosterone -- if a different pattern was observed in females, there would be other differences besides testosterone difference.

You can't have an anecdotal study and have it be a legitimate study.
You can't rely on knowing the fact that males of that age tend to have higher levels of testosterone and assume these groups of CEOs have higher levels of testosterone because they fall into that age category.

If you drew blood, you might find a totally different correlation between these CEOs and low levels of testosterone.
Without even sampling the variable you are trying to make claims about, this is not an experiment, and not science.

"We find a strong association between male CEOs being young and their withdrawal rate of initiated mergers and acquisition," says Prof. Levi, whose research relies on the established correlation between relative youth and increased levels of testosterone.

I sense a case of post-hoc ergo propter hoc here.

I was disappointed (but not surprised) to see this in the summary. It says right in the summary that this study is completely flawed bullshit, but it was posted here anyway. Couldn't find any real nerd news, huh? Thanks for making slashdot grate, samzenpus.

Studies that overlap with common sense, and are pure statistical bias, are useless. Common sense already give us the tip that a young CEO will be more prone to see things as a "fight". But that tip is not usefull, THE ceo we have here can be young, and still be inclined to accept a merge. Statistical bias means nothing wen we face individuals. Only if we where doing 900 merges daily, will mean something.

"You want to be CEO? Certainly, just put your balls in this guillotine....."

Apart from producing a more successful brand (geld?) of CEO, it will also test just how badly they really want the job. Of course the test can only be carried out once - unless you relieve them of a single testicle first, to see how they get on, with the option of taking the remaining one if they do dumb things...... That, itself might be all the motivation they need.

A handy side-effect would be a reduction in the number of sexual harassment suits against top executives.

All fine and well, but a person can't really change his (or her) endocrine makeup (except with probably expensive and repeated medical intervention, which may have some nasty side-effects on your health). So learn to live with your and others' bad choices.

All fine and well, but a person can't really change his (or her) endocrine makeup (except with probably expensive and repeated medical intervention, which may have some nasty side-effects on your health).

Women do it all the time. It's repeated, but not particularly expensive. And while it can have nasty side-effects, it can have beneficial ones as well.

More anti-male blindness, demonizing, and beyond-the-pale gynocentrism. It doesn't seem to matter that everything we have as far as science, industry, technology, and government comes from male agressive creativity -- testosterone mediated inventive behaviors. The passive "doership" of the estrogenoni seems to be the only good and useful thing in our politically correct society. I guess James Watt, Maudsley, Edison, Ford, Einstein, Jobs, Gates.....were all making bad testosterone-filled mistakes. Far from mistakes, they made good, aggressive, risk-taking decisions driven by testosterone. It is more likely that the half of the human population that does not do these things is poisoned by its estrogen into being passive to the point of making NO decisions than possibly wrong aggressively creative decisions. Researchers, stop the constant male bashing.

It's funny, because if you go find their actual paper [ssrn.com], they didn't measure testosterone at all.
"In this paper we examine whether testosterone, which is associated with male dominance seeking and which we have proxied by male CEO age, is associated with M&A withdrawals, the use of tender offers, and bid initiation."
Fucking ridiculous, I'm surprised this paper even got published.

" The ultimatum game is a game often played in economic experiments in which two players interact to decide how to divide a sum of money that is given to them. The first player proposes how to divide the sum between the two players, and the second player can either accept or reject this proposal. If the second player rejects, neither player receives anything. If the second player accepts, the money is split according to the proposal. "

Yeah, worse than that is that they haven't exactly dealt with the other causes of somebody being CEO. Such as having shady morals and a willingness to cheat lie and steal to get there. That is hardly a male only trait, and definitely not strictly tied to testosterone. If it were you wouldn't see that kind of behavior in older people.

And a bit mysandrist to boot. If there had been a "study" measuring the effects of female hormones one women executives (especially with PMS, menopause, and all the other problems some women suffer) it would have been demonized as Misogynistic.

Sex hormones can affect you a lot, at least some people. I used to be among those who insisted psychological differences between men and women were cultural, or due to upbringing and whatnot, then eventually I came to the point where I could no longer go on suppressing my feelings, and I called up a gender identity clinic, explained I felt fairly certain I'm transsexual, that I had tried my very best just living as a man , accepting it and that I just couldn't do it anymore. At the time I think I had pretty much ceased to eat out of depression.

Since then I've had most of my testosterone replaced with estrogen, and aside from very rapidly ( within weeks ) making me feel better than I even thought was possible, it has also caused a lot of other changes. Some of which are quite common among people in my situation, others are more individual. It's hard to determine which changes are due to the hormones and which are merely due to feeling more comfortable with my body, but some are so common and well documented that psychiatrists and endocrinologists more or less assume them to be hormonal. There's always exceptions, and the effects are variable and individual, but the following is frequently described:

Reduced sex driveIncreased appetiteA change in orgasmic pattern, moving it closer to that described by womenIncreased skin sensitivity.

The last bit is actually likely due to the skin going thinner and hence a physical rather than psychological change. Bruises also stay visible longer, acne tends to improve, and many have trouble with dry skin. For me the last bit was so bad I developed severe rashes and had to go on a course of cortisone treatment. Nowadays I can keep it in control with normal skin lotion however.

Now I don't mean with this that all stereotypes you hear about men and women are true, or that this particular study is even worth the paper it is written on. After all I'm arguably quiet different from most people ( or otherwise I would never had to do this ), and hence my experiences or those of people similar to me can't really be extrapolated to the rest of the population.

However I can tell you one thing for sure. Hormones can do a lot of things to a person. Some people want to insist I'm just imagining it or that it may be a placebo effect or similar. It's a real pity the physical effects ( like breast development ) are partially irreversible, because otherwise I could just tell those people to go try for themselves. It really does affect you quite a bit.

Some women called in from 500,000 years ago, they'd like their common knowledge back.

As a great snake handler in Rapid City SD once put it "Rattlesnakes and testosterone are a lethal combination; like alcohol and testosterone, gasoline engines and testosterone, fireworks and testosterone...well, pretty much anything can be fatal when combined with excessive amounts of testosterone, sometimes creatively so."

Once I needed to get my testosterone levels checked. My doctor had a doctor-in-training assisting that month, so they spent a lot of my appointment talking shop. The doctor said, "I have another patient who says that testosterone levels are higher in single men than married men - he reads stuff on the Internet - " (Here she shot me a funny look.) "and now that he's divorced, he's expecting a change. There's actually some data to back this up. The thing is, single men tend to be younger than married men, so

The sad thing is, they realize the problem of proxying testosterone by age and spend a couple of pages hand waving it away and fail pretty badly... Your gut feeling is correct, no need to read the paper.

That was my thought, the others were apparently not cool enough to get any offers. Seriously, in the business world these days it's not likely that you'll be in a position very long before the option to initiate, scrap or resist a merger comes along.

I'm wondering if they considered the fact that younger CEOs tend to be head of smaller companies and as such more in need of initiating, scrapping or resisting a merger or acquisition? I mean there's a reason why we have the term "hostile takeover."